Net revenue went down 8.8% (down1.6% excluding currency) to
$6.9 billion and lagged the Zacks Consensus Estimate of $7.1
billion by 2.8%. Earnings declined from the prior-year level
mainly due to volume decline in the tobacco category. Cigarette
shipment volume decreased 4.4% to 196.0 billion units mainly due
to a decline in total market share .

Segment Details

During the quarter, net revenue in the European Union region
climbed 2.2% (down 0.4% excluding currency) from the prior-year
quarter to $2.0 billion predominantly reflecting lower total
market share, notably in France and Poland.

Net revenue in the Eastern Europe, the Middle East &
Africa (EMEA) region declined 1.7% (up 4.5% excluding currency)
from the prior-year quarter to $2.0 billion. Revenues improved in
organic terms backed by favorable pricing of $234 million,
principally in Russia. The new business structure in Egypt also
contributed to the growth in the region.

Asia recorded net revenue of $2.2 billion, down 21.8% (down
8.7% excluding currency) from the prior-year quarter due to
unfavorable volume/mix primarily in Japan and Indonesia.

Philip Morris' quarterly gross profit declined 10.8% from the
prior-year quarter to $4.5 billion, mainly due to higher excise
tax faced by the company during the quarter. Operating income
slipped 12.3% year over year to $3.0 billion in the reported
quarter due to higher marketing, administration and research
costs.

Financial Update

During the quarter, Philip Morris spent $1.25 billion to
repurchase 15.4 million shares.

Guidance

Management revised increased its outlook for fiscal 2014. It
now expects GAAP earnings in the range of $5.09 to $5.19, higher
than $5.02 to $5.12 expected previously. For fiscal 2014,
the company expects currency impact of 61 cents per share, lower
than 71 cents expected previously. Excluding the currency impact
and one time restructuring charges, the company expects its
earnings to increase approximately 6% to 8% from adjusted
earnings of $5.40 in 2013.